```

[House Report 106-700]
[From the U.S. Government Publishing Office]

106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     106-700

======================================================================

 
           UNSOLICITED COMMERCIAL ELECTRONIC MAIL ACT OF 2000

                                _______
                                

 June 26, 2000.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Bliley, from the Committee on Commerce, submitted the following

                              R E P O R T

                        [To accompany H.R. 3113]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Commerce, to whom was referred the bill 
(H.R. 3113) to protect individuals, families, and Internet 
service providers from unsolicited and unwanted electronic 
mail, having considered the same, report favorably thereon with 
an amendment and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     6
Background and Need for Legislation..............................     7
Hearings.........................................................     9
Committee Consideration..........................................     9
Committee Votes..................................................     9
Committee Oversight Findings.....................................     9
Committee on Government Reform Oversight Findings................     9
New Budget Authority, Entitlement Authority, and Tax Expenditures     9
Committee Cost Estimate..........................................    10
Congressional Budget Office Estimate.............................    10
Federal Mandates Statement.......................................    12
Advisory Committee Statement.....................................    12
Constitutional Authority Statement...............................    12
Applicability to Legislative Branch..............................    13
Section-by-Section Analysis of the Legislation...................    13
Changes in Existing Law Made by the Bill, as Reported............    17

                               Amendment

  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Unsolicited Commercial Electronic Mail 
Act of 2000''.

SEC. 2. CONGRESSIONAL FINDINGS AND POLICY.

  (a) Findings.--The Congress finds the following:
          (1) There is a right of free speech on the Internet.
          (2) The Internet has increasingly become a critical mode of 
        global communication and now presents unprecedented 
        opportunities for the development and growth of global commerce 
        and an integrated worldwide economy. In order for global 
        commerce on the Internet to reach its full potential, 
        individuals and entities using the Internet and other online 
        services should be prevented from engaging in activities that 
        prevent other users and Internet service providers from having 
        a reasonably predictable, efficient, and economical online 
        experience.
          (3) Unsolicited commercial electronic mail can be an 
        important mechanism through which businesses advertise and 
        attract customers in the online environment.
          (4) The receipt of unsolicited commercial electronic mail may 
        result in costs to recipients who cannot refuse to accept such 
        mail and who incur costs for the storage of such mail, or for 
        the time spent accessing, reviewing, and discarding such mail, 
        or for both.
          (5) Unsolicited commercial electronic mail may impose 
        significant monetary costs on Internet access services, 
        businesses, and educational and nonprofit institutions that 
        carry and receive such mail, as there is a finite volume of 
        mail that such providers, businesses, and institutions can 
        handle without further investment. The sending of such mail is 
        increasingly and negatively affecting the quality of service 
        provided to customers of Internet access service, and shifting 
        costs from the sender of the advertisement to the Internet 
        access service.
          (6) While some senders of unsolicited commercial electronic 
        mail messages provide simple and reliable ways for recipients 
        to reject (or ``opt-out'' of) receipt of unsolicited commercial 
        electronic mail from such senders in the future, other senders 
        provide no such ``opt-out'' mechanism, or refuse to honor the 
        requests of recipients not to receive electronic mail from such 
        senders in the future, or both.
          (7) An increasing number of senders of unsolicited commercial 
        electronic mail purposefully disguise the source of such mail 
        so as to prevent recipients from responding to such mail 
        quickly and easily.
          (8) Many senders of unsolicited commercial electronic mail 
        collect or harvest electronic mail addresses of potential 
        recipients without the knowledge of those recipients and in 
        violation of the rules or terms of service of the database from 
        which such addresses are collected.
          (9) Because recipients of unsolicited commercial electronic 
        mail are unable to avoid the receipt of such mail through 
        reasonable means, such mail may invade the privacy of 
        recipients.
          (10) In legislating against certain abuses on the Internet, 
        Congress should be very careful to avoid infringing in any way 
        upon constitutionally protected rights, including the rights of 
        assembly, free speech, and privacy.
  (b) Congressional Determination of Public Policy.--On the basis of 
the findings in subsection (a), the Congress determines that--
          (1) there is substantial government interest in regulation of 
        unsolicited commercial electronic mail;
          (2) Internet service providers should not be compelled to 
        bear the costs of unsolicited commercial electronic mail 
        without compensation from the sender; and
          (3) recipients of unsolicited commercial electronic mail have 
        a right to decline to receive or have their children receive 
        unsolicited commercial electronic mail.

SEC. 3. DEFINITIONS.

  In this Act:
          (1) Children.--The term ``children'' includes natural 
        children, stepchildren, adopted children, and children who are 
        wards of or in custody of the parent, who have not attained the 
        age of 18 and who reside with the parent or are under his or 
        her care, custody, or supervision.
          (2) Commercial electronic mail message.--The term 
        ``commercial electronic mail message'' means any electronic 
        mail message that primarily advertises or promotes the 
        commercial availability of a product or service for profit or 
        invites the recipient to view content on an Internet web site 
        that is operated for a commercial purpose. An electronic mail 
        message shall not be considered to be a commercial electronic 
        mail message solely because such message includes a reference 
        to a commercial entity that serves to identify the initiator.
          (3) Commission.--The term ``Commission'' means the Federal 
        Trade Commission.
          (4) Domain name.--The term ``domain name'' means any 
        alphanumeric designation which is registered with or assigned 
        by any domain name registrar, domain name registry, or other 
        domain name registration authority as part of an electronic 
        address on the Internet.
          (5) Electronic mail address.--
                  (A) In general.--The term ``electronic mail address'' 
                means a destination (commonly expressed as a string of 
                characters) to which electronic mail can be sent or 
                delivered.
                  (B) Inclusion.--In the case of the Internet, the term 
                ``electronic mail address'' may include an electronic 
                mail address consisting of a user name or mailbox 
                (commonly referred to as the ``local part'') and a 
                reference to an Internet domain (commonly referred to 
                as the ``domain part'').
          (6) Internet.--The term ``Internet'' has the meaning given 
        that term in section 231(e)(3) of the Communications Act of 
        1934 (47 U.S.C. 231(e)(3)).
          (7) Internet access service.--The term ``Internet access 
        service'' has the meaning given that term in section 231(e)(4) 
        of the Communications Act of 1934 (47 U.S.C. 231(e)(4)).
          (8) Initiate.--The term ``initiate'', when used with respect 
        to a commercial electronic mail message, means to originate 
        such message or to procure the transmission of such message.
          (9) Initiator.--The term ``initiator'', when used with 
        respect to a commercial electronic mail message, means the 
        person who initiates such message. Such term does not include a 
        provider of an Internet access service whose role is limited to 
        handling, transmitting, or retransmitting the message.
          (10) Pre-existing business relationship.--The term ``pre-
        existing business relationship'' means, when used with respect 
        to the initiator and recipient of a commercial electronic mail 
        message, that either of the following circumstances exist:
                  (A) Previous business transaction.--
                          (i) Within the 5-year period ending upon 
                        receipt of such message, there has been a 
                        business transaction between the initiator and 
                        the recipient (including a transaction 
                        involving the provision, free of charge, of 
                        information requested by the recipient, of 
                        goods, or of services); and
                          (ii) the recipient was, at the time of such 
                        transaction or thereafter, provided a clear and 
                        conspicuous notice of an opportunity not to 
                        receive further messages from the initiator and 
                        has not exercised such opportunity.
                  (B) Opt in.--The recipient has given the initiator 
                permission to initiate commercial electronic mail 
                messages to the electronic mail address of the 
                recipient and has not subsequently revoked such 
                permission.
          (11) Recipient.--The term ``recipient'', when used with 
        respect to a commercial electronic mail message, means the 
        addressee of such message.
          (12) Unsolicited commercial electronic mail message.--The 
        term ``unsolicited commercial electronic mail message'' means 
        any commercial electronic mail message that is sent by the 
        initiator to a recipient with whom the initiator does not have 
        a pre-existing business relationship.

SEC. 4. PROTECTIONS AGAINST UNSOLICITED COMMERCIAL ELECTRONIC MAIL.

  (a) Requirements for Transmission of Messages.--
          (1) Inclusion of return address.--It shall be unlawful for 
        any person to initiate the transmission of an unsolicited 
        commercial electronic mail message to any person within the 
        United States unless such message contains a valid electronic 
        mail address, conspicuously displayed, to which a recipient may 
        send a reply to the initiator to indicate a desire not to 
        receive any further messages.
          (2) Prohibition of transmission after objection.--If a 
        recipient makes a request to a person to be removed from all 
        distribution lists under the control of such person, it shall 
        be unlawful for such person to initiate the transmission of an 
        unsolicited commercial electronic mail message to such a 
        recipient within the United States after the expiration, after 
        receipt of such request, of a reasonable period of time for 
        removal from such lists. Such a request shall be deemed to 
        terminate a pre-existing business relationship for purposes of 
        determining whether subsequent messages are unsolicited 
        commercial electronic mail messages.
          (3) Accurate routing information.--It shall be unlawful for 
        any person who initiates the transmission of any unsolicited 
        commercial electronic mail message to any person within the 
        United States to take any action that causes any Internet 
        routing information contained in or accompanying such message--
                  (A) to be inaccurate;
                  (B) to be invalid according to the prevailing 
                standards for Internet protocols; or
                  (C) to fail to accurately reflect the routing of such 
                message.
          (4) Inclusion of identifier and opt-out.--It shall be 
        unlawful for any person to initiate the transmission of any 
        unsolicited commercial electronic mail message to any person 
        within the United States unless the message provides, in a 
        manner that is clear and conspicuous to the recipient--
                  (A) identification that the message is an unsolicited 
                commercial electronic mail message; and
                  (B) notice of the opportunity under paragraph (2) not 
                to receive further unsolicited commercial electronic 
                mail messages from the initiator.
  (b) Enforcement of Policies by Internet Access Service Providers.--
          (1) Authority to establish policies.--A provider of Internet 
        access service may enforce a policy regarding unsolicited 
        commercial electronic mail messages, but only if such policy 
        complies with the requirements of paragraph (3).
          (2) Prohibition of transmissions in violation of posted 
        policy.--It shall be unlawful for any person to initiate the 
        transmission of an unsolicited commercial electronic mail 
        message to any person within the United States in violation of 
        a policy governing the use of the equipment of a provider of 
        Internet access service for transmission of unsolicited 
        commercial electronic mail messages that meets the requirements 
        of paragraph (3).
          (3) Requirements for enforceability.--The requirements under 
        this paragraph for a policy regarding unsolicited commercial 
        electronic mail messages are as follows:
                  (A) Clarity.--The policy shall explicitly provide 
                that compliance with a rule or set of rules is a 
                condition of use of the equipment of a provider of 
                Internet access service to deliver commercial 
                electronic mail messages.
                  (B) Publicly availability.--The policy shall be 
                publicly available by at least one of the following 
                methods:
                          (i) Web posting.--The policy is clearly and 
                        conspicuously posted on a World Wide Web site 
                        of the provider of Internet access service, 
                        which has an Internet domain name that is 
                        identical to the Internet domain name of the 
                        electronic mail address to which the rule or 
                        set of rules applies.
                          (ii) Notification in compliance with 
                        technological standard.--Such policy is made 
                        publicly available by the provider of Internet 
                        access service in accordance with a 
                        technological standard adopted by an 
                        appropriate Internet standards setting body 
                        (such as the Internet Engineering Task Force) 
                        and recognized by the Commission by rule as a 
                        fair standard.
                  (C) Internal opt-out list.--If the policy of a 
                provider of Internet access service requires 
                compensation specifically for the transmission of 
                unsolicited commercial electronic mail messages into 
                its system, the provider shall provide an option to its 
                subscribers not to receive any unsolicited commercial 
                electronic mail messages, except that such option is 
                not required for any subscriber who has agreed to 
                receive unsolicited commercial electronic mail messages 
                in exchange for discounted or free Internet access 
                service.
          (4) Other enforcement.--Nothing in this Act shall be 
        construed to prevent or limit, in any way, a provider of 
        Internet access service from enforcing, pursuant to any remedy 
        available under any other provision of Federal, State, or local 
        criminal or civil law, a policy regarding unsolicited 
        commercial electronic mail messages that complies with the 
        requirements of paragraph (3).
  (c) Protection of Internet Access Service Providers.--
          (1) Good faith efforts to block transmissions.--A provider of 
        Internet access service shall not be liable, under any Federal, 
        State, or local civil or criminal law, for any action it takes 
        in good faith to block the transmission or receipt of 
        unsolicited commercial electronic mail messages.
          (2) Innocent retransmission.--A provider of Internet access 
        service the facilities of which are used only as an 
        intermediary, retransmitter, or relay for unsolicited bulk 
        commercial electronic mail messages transmitted in violation of 
        subsection (a) shall not be liable for any harm resulting from 
        the transmission or receipt of such electronic mail unless it 
        permits the transmission or retransmission of such electronic 
        mail with actual knowledge that the transmission is prohibited 
        by subsection (a) or subsection (b)(2).

SEC. 5. ENFORCEMENT.

  (a) Governmental Order.--
          (1) Notification of alleged violation.--The Commission shall 
        send a notification of alleged violation to any person who 
        violates section 4 if--
                  (A) a recipient or a provider of Internet access 
                service notifies the Commission, in such form and 
                manner as the Commission shall determine, that a 
                transmission has been received in violation of section 
                4; or
                  (B) the Commission has other reason to believe that 
                such person has violated or is violating section 4.
          (2) Terms of notification.--A notification of alleged 
        violation shall--
                  (A) identify the violation for which the notification 
                was issued;
                  (B) direct the initiator to refrain from further 
                violations of section 4;
                  (C) expressly prohibit the initiator (and the agents 
                or assigns of the initiator) from further initiating 
                unsolicited commercial electronic mail messages in 
                violation of section 4 to the designated recipients or 
                providers of Internet access service, effective on the 
                3rd day (excluding Saturdays, Sundays, and legal public 
                holidays) after receipt of the notification; and
                  (D) direct the initiator (and the agents or assigns 
                of the initiator) to delete immediately the names and 
                electronic mail addresses of the designated recipients 
                or providers from all mailing lists owned or controlled 
                by the initiator (or such agents or assigns) and 
                prohibit the initiator (and such agents or assigns) 
                from the sale, lease, exchange, license, or other 
                transaction involving mailing lists bearing the names 
                and electronic mail addresses of the designated 
                recipients or providers.
          (3) Coverage of minor children by notification.--Upon request 
        of a recipient of an electronic mail message transmitted in 
        violation of section 4, the Commission shall include in the 
        notification of alleged violation the names and electronic mail 
        addresses of any child of the recipient.
          (4) Enforcement of notification terms.--
                  (A) Complaint.--If the Commission believes that the 
                initiator (or the agents or assigns of the initiator) 
                has failed to comply with the terms of a notification 
                issued under this subsection, the Commission shall 
                serve upon the initiator (or such agents or assigns), 
                by registered or certified mail, a complaint stating 
                the reasons for its belief and request that any 
                response thereto be filed in writing with the 
                Commission within 15 days after the date of such 
                service.
                  (B) Hearing and order.--If the Commission, after an 
                opportunity for a hearing on the record, determines 
                that the person upon whom the complaint was served 
                violated the terms of the notification, the Commission 
                shall issue an order directing that person to comply 
                with the terms of the notification.
                  (C) Presumption.--For purposes of a determination 
                under subparagraph (B), receipt of any transmission in 
                violation of a notification of alleged violation 30 
                days (excluding Saturdays, Sundays, and legal public 
                holidays) or more after the effective date of the 
                notification shall create a rebuttable presumption that 
                such transmission was sent after such effective date.
          (5) Enforcement by court order.--Any district court of the 
        United States within the jurisdiction of which any transmission 
        is sent or received in violation of a notification given under 
        this subsection shall have jurisdiction, upon application by 
        the Attorney General, to issue an order commanding compliance 
        with such notification. Failure to observe such order may be 
        punishable by the court as contempt thereof.
  (b) Private Right of Action.--
          (1) Actions authorized.--A recipient or a provider of 
        Internet access service may, if otherwise permitted by the laws 
        or rules of court of a State, bring in an appropriate court of 
        that State, or may bring in an appropriate Federal court if 
        such laws or rules do not so permit, either or both of the 
        following actions:
                  (A) An action based on a violation of section 4 to 
                enjoin such violation.
                  (B) An action to recover for actual monetary loss 
                from such a violation in an amount equal to the 
                greatest of--
                          (i) the amount of such actual monetary loss; 
                        or
                          (ii) $500 for each such violation, not to 
                        exceed a total of $50,000.
          (2) Additional remedies.--If the court finds that the 
        defendant willfully, knowingly, or repeatedly violated section 
        4, the court may, in its discretion, increase the amount of the 
        award to an amount equal to not more than three times the 
        amount available under paragraph (1).
          (3) Attorney fees.--In any such action, the court may, in its 
        discretion, require an undertaking for the payment of the costs 
        of such action, and assess reasonable costs, including 
        reasonable attorneys' fees, against any party.
          (4) Protection of trade secrets.--At the request of any party 
        to an action brought pursuant to this subsection or any other 
        participant in such an action, the court may, in its 
        discretion, issue protective orders and conduct legal 
        proceedings in such a way as to protect the secrecy and 
        security of the computer, computer network, computer data, 
        computer program, and computer software involved in order to 
        prevent possible recurrence of the same or a similar act by 
        another person and to protect any trade secrets of any such 
        party or participant.

SEC. 6. EFFECT ON OTHER LAWS.

  (a) No Effect on Criminal Law.--Nothing in this Act shall be 
construed to impair the enforcement of section 223 or 231 of the 
Communications Act of 1934, chapter 71 (relating to obscenity) or 110 
(relating to sexual exploitation of children) of title 18, United 
States Code, or any other Federal criminal statute.
  (b) State Law.--No State or local government may impose any civil 
liability for commercial activities or actions in interstate or foreign 
commerce in connection with an activity or action described in section 
4 of this Act that is inconsistent with the treatment of such 
activities or actions under this Act, except that this Act shall not 
preempt any civil remedy under State trespass or contract law or under 
any provision of Federal, State, or local criminal law or any civil 
remedy available under such law that relates to acts of computer fraud 
or abuse arising from the unauthorized transmission of unsolicited 
commercial electronic mail messages.

SEC. 7. STUDY OF EFFECTS OF UNSOLICITED COMMERCIAL ELECTRONIC MAIL.

  Not later than 18 months after the date of enactment of this Act, the 
Commission shall submit a report to the Congress that provides a 
detailed analysis of the effectiveness and enforcement of the 
provisions of this Act and the need (if any) for the Congress to modify 
such provisions.

SEC. 8 SEPARABILITY.

  If any provision of this Act or the application thereof to any person 
or circumstance is held invalid, the remainder of this Act and the 
application of such provision to other persons or circumstances shall 
not be affected.

SEC. 9. EFFECTIVE DATE.

  The provisions of this Act shall take effect 90 days after the date 
of enactment of this Act.

                          Purpose and Summary

    The purpose of H.R. 3113, the Unsolicited Commercial 
Electronic Mail Act of 2000, is to prohibit the initiation and 
transmission of unsolicited commercial electronic mail 
messages. The legislation is narrowly drawn to protect the 
freedom of speech on the Internet and to protect legitimate 
commercial uses of electronic mail messages.
    H.R. 3113 prohibits the transmission of unsolicited 
commercial electronic mail messages unless the initiator of 
that message provides a valid return electronic mail address 
and provides the recipient of such messages the opportunity not 
to receive future mailings. In addition, the bill allows 
Internet Service Providers (ISP) to enforce their own policy 
against unsolicited commercial electronic mail messages. Under 
H.R. 3113, the Federal Trade Commission is authorized to bring 
action against initiators of unsolicited commercial electronic 
mail messages who operate in violation of the legislation's 
provisions. Further, State or local laws that are inconsistent 
with section 4 of H.R. 3113 are preempted, except in the case 
of any civil remedy under State trespass or contract law or any 
Federal, state or local law relating to acts of computer fraud 
and abuse arising from the unauthorized transmission of 
unsolicited commercial electronic mail messages.

                  Background and Need for Legislation

    The creation and growth of the Internet has been one of the 
most important developments of the second half of the 20th 
century. From its origin as an academic research tool in the 
1960's, the Internet today has become a global communications, 
information, entertainment and commercial medium.
    The use of the Internet to conduct commercial activities, 
often referred to as ``electronic commerce,'' has experienced 
enormous growth. In 1996, consumers spent just $2.6 billion in 
online transactions, compared to more than $50 billion in 1999. 
Because of the tremendous efficiencies gained from electronic 
transactions, and the enormous reach of the Internet, the 
Internet is now used to supplement, or in some cases replace, 
traditional commercial methods.
    In one area in particular, the sending of electronic 
commercial solicitations (either requested or not requested by 
a consumer), the Internet has brought tremendous efficiencies 
of scale. Unlike traditional commercial solicitations delivered 
via mail, electronic solicitations delivered via electronic 
mail cost almost nothing to create and transmit.
    Given its ability to quickly and efficiently disseminate 
multiple electronic messages, the Internet has heightened 
consumer anxiety over unwanted commercial solicitations, and 
led many consumer groups to ask Congress and the States to 
enact restrictions on unsolicited commercial electronic (UCE) 
mail messages, more commonly known as ``spam.''
    There are a number of consumer concerns regarding 
unsolicited commercial electronic mail messages. First, a 
substantial portion of those messages contain solicitations 
that are false or misleading. In discussing the use of 
unsolicited commercial electronic mail messages to mislead 
consumers, Eileen Harrington, the Associate Director of 
Marketing Practices at the Federal Trade Commission testified 
that:

          * * * UCE has become the fraud artists' calling card 
        on the Internet. Much of the spam in the Commissions's 
        database contain false information about the sender, 
        misleading subject lines, and extravagant earnings or 
        performance claims about goods and services. These 
        types of claims are the stock in trade of fraudulent 
        schemes. * * * The Commission believes the 
        proliferation of deceptive bulk UCE on the Internet 
        poses a threat to consumer confidence in online 
        commerce and thus views the problem of deception as a 
        significant issue in the debate over UCE.

(Written testimony at the November 3, 1999 hearing before the 
Subcommittee on Telecommunications, Trade and Consumer 
Protection, Serial No. 106-84, pp. 25-26.)
    There are also concerns that many unsolicited commercial 
electronic mail messages contain material of an adult nature, 
and can easily be accessed by children from the family 
computer.
    The issue of unsolicited commercial advertisements has been 
the subject of much debate in the United States over the past 
decades. From in-person solicitations, to phone-based 
telemarketing, to junk-faxes, and now to Internet-based 
solicitations, consumers have historically complained that 
these unwanted solicitations violate their privacy.
    The intrusion on an individual's privacy, and the time and 
financial burdens of deleting unwanted messages is the driving 
concern behind the proposed legislation to regulate the 
practice of spamming. Case law has developed the notion of 
``privacy rights'' of recipients establishing limits on 
unsolicited commercial solicitations. But First Amendment 
rights of commercial speech to individuals who wish to receive 
such solicitations have led courts to find differing levels of 
regulation permissible, depending on the medium. In determining 
the appropriate level of regulation, the Court considers the 
amount of control individuals can exercise over the content and 
the medium's invasive nature.
    In 1991, Congress passed the Telephone Consumer Protection 
Act (P.L. 102-243) to restrict the use of automated, pre-
recorded telephone calls and unsolicited commercial fax 
transmissions. Congress found that such unsolicited faxes and 
automated telephone calls were a nuisance and an invasion of 
privacy. The constitutionality of the Telephone Consumer 
Protection Act was upheld in Destination Ventures Ltd. v. FCC, 
46 F. 3d 54 (9th Cir. 1995), and Moser v. FCC, 46 F. 3d 970 
(9th Cir. 1995), cert denied, 515 U.S. 1161. In these cases, 
the courts concluded that Congress had accurately identified 
automated telemarketing calls as a threat to privacy (46 F. 3d 
at 974) and that the banning of unsolicited commercial fax 
solicitations was a reasonable means of reducing cost shifting 
(46 F.3d at 56).
    There is also concern about the burden bulk unsolicited 
commercial electronic mail messages place on the Internet 
infrastructure and on companies providing Internet access 
services. Unlike traditional commercial solicitations made by 
mail, the cost of unsolicited commercial electronic mail 
messages is shifted from the sender to the recipient and the 
recipient's ISP.
    Most ISPs claim to incur significant costs from unsolicited 
commercial electronic mail messages, such as the costs involved 
with network bandwidth, processing e-mail, and staff time. ISPs 
must also address the ongoing relationship with its customers 
and its reputation in the marketplace for fostering an 
environment where spamming is prevalent. In response, many ISPs 
have enacted spamming policies to affect the level of blame (or 
credit) that is attributed to them regarding the unsolicited e-
mails their customers receive.
    To date, sixteen States have enacted laws to prohibit or 
restrict the transmission of such messages. Generally, these 
laws prohibit the transmission of bulk unsolicited commercial 
electronic mail messages that do not contain a label 
identifying the message as advertising or which contain 
misleading or false routing information. Many laws also require 
senders of unsolicited commercial electronic mail messages to 
provide recipients the opportunity to opt-out of the receipt of 
future mailings. This year, courts have found the anti-spam 
laws of California and Washington to be in violation of the 
Commerce Clause of the United States Constitution. Although 
both cases are still pending, these events show the need for 
this issue to be addressed by the Congress.

                                Hearings

    The Subcommittee on Telecommunications, Trade and Consumer 
Protection held a hearing on H.R. 3113, the Unsolicited 
Electronic Mail Act on November 3, 1999. The Subcommittee 
received testimony from the following witnesses: The Honorable 
Heather Wilson; The Honorable Gene Green; The Honorable Gary G. 
Miller; The Honorable Christopher H. Smith; Ms. Eileen 
Harrington, Associate Director of Marketing Practices Bureau of 
Consumer Protection, Federal Trade Commission; Mr. John Brown, 
President, iHighway.net Inc.; Mr. Alan Charles Raul, Sidley & 
Austin; Mr. Michael Russina, Senior Director Systems 
Operations, SBC Communications Inc.; Mr. Charles H. Kennedy, 
Morrison & Forester LLP; Mr. Jerry Cerasale, Senior Vice 
President, Direct Marketing Association; and, Mr. Ray Everett-
Church, Chief Privacy Officer and Vice President for Public 
Privacy, Alladvantage.com.

                        Committee Consideration

    On March 23, 2000, the Subcommittee on Telecommunications, 
Trade and Consumer Protection met in open markup session and 
approved H.R. 3113, the Unsolicited Electronic Mail Act for 
Full Committee consideration, amended, by a voice vote. On June 
14, 2000, the Full Committee met in open markup session and 
ordered H.R. 3113 reported to the House, amended, by a voice 
vote, a quorum being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 3113 reported. A motion by Mr. Bliley to order H.R. 3113 
reported to the House, without amendment, was agreed to by a 
voice vote, a quorum being present.
    The following amendment was agreed to by a voice vote:

          An amendment in the nature of a substitute by Mrs. 
        Wilson, No. 1, making various changes to the bill as 
        approved by the Subcommittee on Telecommunications, 
        Trade, and Consumer Protection.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a legislative 
hearing and made findings that are reflected in this report.

           committee on government reform oversight findings

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, no oversight findings have been 
submitted to the Committee by the Committee on Government 
Reform.

   new budget authority, entitlement authority, and tax expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
3113, the Unsolicited Electronic Mail Act, would result in no 
new or increased budget authority, entitlement authority, or 
tax expenditures or revenues.

                        committee cost estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  congressional budget office estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 26, 2000.
Hon. Tom Bliley,
Chairman, Committee on Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3113, the 
Unsolicited Commercial Electronic Mail Act of 2000.
    If your wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Ken Johnson 
(for federal costs), Shelley Finlayson (for the state and local 
impact), and Jean Wooster (for the impact on the private 
sector.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 3113--Unsolicited Commercial Electronic Mail Act of 2000

    Summary: H.R. 3113 would enact new restrictions on the 
transmission of unsolicited commercial electronic mail (UCE). 
Under this bill, consumers would have the right to file a 
complaint with the Federal Trade Commission (FTC) if they 
receive UCE after previously opting not to receive such 
electronic mail. Also, the bill would require that all UCE 
messages identify themselves as UCE, explain how the consumer 
could discontinue receiving UCE, and contain accurate 
information about the senders and how to contact them. The FTC 
would be required to issue compliance orders to persons who 
violate these provisions. H.R. 3113 also gives consumers the 
right to initiate private action to prohibit violations of the 
bill and recover damages. Finally, the bill would direct the 
FTC to issue a study within 18 months on the effectiveness and 
enforcement of these provisions.
    CBO estimates that implementing H.R. 3113 would cost about 
$13 million in 2001 and about $60 million over the 2001-2005 
period, assuming appropriation of the necessary amounts. The 
cost of implementing the bill could decline over time if it 
discourages UCE. H.R. 3113 would not affect spending or 
receipts; therefore, pay-as-you-go procedures would not apply.
    H.R. 3113 contains intergovernmental mandates as defined in 
UMRA, but CBO estimates that complying with these mandates 
would result in no direct costs to state and local governments 
and thus would not exceed the threshold established by that act 
($55 million in 2000, adjusted annually for inflation). The 
bill would preempt certain state and local laws to regulate 
UCE, and certain state and local liability laws. Tribal 
governments would not be affected.
    H.R. 3113 would impose private-sector mandates, as defined 
by UMRA, on senders of unsolicited commercial electronic mail. 
CBO estimates that the direct costs of those mandates would not 
exceed the annual threshold established by UMRA for private-
sector mandates ($109 million in 2000, adjusted for inflation).
    Estimates cost to the Federal Government: The estimated 
budgetary impact of H.R. 3113 is shown in the following table. 
The costs of this legislation fall within budget function 370 
(commerce and housing credit).

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2001     2002     2003     2004     2005
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level......................................       13       11       11       12       12
Estimated Outlays..................................................       13       11       11       12       12
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: CBO estimates that the FTC would spend 
about $13 million in 2001 and $11 million to $12 million 
annually in subsequent years to implement H.R. 3113, assuming 
appropriation of the necessary amounts. (Annual cost would rise 
slightly to cover anticipated inflation.) However, the total 
costs of implementing H.R. 3113 could decline if the bill is 
effective in reducing the amount of unlawful UCE over time.
    The FTC's administrative costs would increase primarily 
because H.R. 1331 would require the agency to notify senders of 
UCE when they violate provisions of the bill. The FTC currently 
receives an average of about 10,000 complaints per day 
regarding UCE. Based on information from the FTC, CBO estimates 
that the staff costs of responding to these complaints would be 
$6 million to $7 million a year. We estimate that purchasing 
new computer equipment to handle UCE cases would cost $5 
million in 2001 and $2 million a year in subsequent years.
    For those violators who continue to send unlawful UCE after 
they have been notified of violations, H.R. 3113 requires that 
the FTC send a complaint by certified mail. CBO estimates that 
the cost of sending these formal complaints would be $2 million 
a year.
    If the complaint fails to end the violations, then H.R. 
3113 requires that the FTC issue an order to the violator. The 
FTC also has the option of referring the case to the federal 
courts. CBO estimates that these costs would not be significant 
because of the limited number of cases that would reach this 
stage in the enforcement process.
    H.R. 3113 also requires the FTC to complete, within 18 
months, a study of the effectiveness and enforcement of the 
bill. Based on information from the FTC, CBO estimates that the 
costs of this study would not be significant.
    Pay-as-you-go considerations: None.
    Estimated impact on state, local, and tribal governments: 
H.R. 3113 would preempt state and local regulation of UCE to 
the extent that such laws exist and conflict with this bill's 
requirements. In addition, the bill would preempt state and 
local liability laws as they apply to Internet service 
providers (ISPs) in certain instances. These preemptions would 
be intergovernmental mandates as defined in UMRA, but CBO 
estimates that complying with these mandates would result in no 
direct costs to state and local governments and thus would not 
exceed the threshold established in that act ($55 million in 
2000, adjusted annually for inflation). Tribal governments 
would not be affected by these provisions.
    Estimated impact on the private sector: H.R. 3113 would 
impose private-sector mandates as defined by UMRA on senders of 
UCE. The bill would require senders to identify their messages 
as UCE, and provide a valid return electronic-mail address and 
an accurate routing number within their messages. The bill also 
would require persons who send UCE to provide the recipients of 
their messages with an option to discontinue receiving UCE from 
the sender, and to notify recipients of that option to 
discontinue in each UCE message.
    In addition, H.R. 3113 would make it unlawful for any 
person to initiate the transmission of an UCE message to any 
person within the United States in violation of a policy 
developed by an ISP governing the use of its equipment for 
transmission of UCE messages based on the guidelines outlined 
in the bill. However, this would have only a limited effect on 
the private sector because the Computer Fraud and Abuse Act of 
1986 currently prohibits some forms of UCE transmissions. 
Nonetheless, it is not clear that existing federal law 
prohibits all transmissions of UCE in violation of an ISP 
policy against such transmissions.
    Based on information from government and industry sources, 
CBO estimates that the direct costs of those mandates would not 
exceed the annual threshold established by UMRA for private-
sector mandates ($109 million in 2000, adjusted for inflation).
    Estimate prepared by Federal Costs: Ken Johnson; Impact on 
State, Local, and Tribal Governments: Shelly Finlayson; Impact 
on the Private Sector: Jean Wooster.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       federal mandates statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      advisory committee statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   constitutional authority statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  applicability to legislative branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             section-by-section analysis of the legislation

Section 1. Short title

    Section 1 establishes the short title of this Act as the 
``Unsolicited Commercial Electronic Mail Act of 2000.''

Section 2. Congressional findings and policies

    Section 2 lays out Congressional findings and general 
policy on the issue of unsolicited commercial electronic mail.

Section 3. Definitions

    Section 3 defines the following terms: ``children,'' 
``commercial electronic mail message,'' ``Commission,'' 
``domain name,'' ``electronic mail address,'' ``Internet,'' 
``Internet access service,'' ``initiate,'' ``initiator,'' 
``pre-existing business relationship,'' ``recipient,'' and 
``unsolicited commercial electronic mail message'.
    The concept of unsolicited commercial electronic mail plays 
a key role in the understanding of H.R. 3113. As used in the 
bill, the term unsolicited commercial electronic mail means any 
commercial electronic mail message that is sent to an 
individual with whom the initiator of the electronic message 
does not have a pre-existing business relationship.
    H.R. 3113 provides for two types of business relationships 
that may qualify as a pre-existing business relations: (1) When 
there has been a business transaction between the initiator of 
an electronic message and the recipient in the past five years 
and the recipient was provided a clear and conspicuous notice 
of the opportunity not to receive further electronic message 
from the initiator and the recipient has not exercised that 
option, or (2) When the recipient has given permission to the 
initiator to send electronic mail messages and has not revoked 
such permission. The Committee intends that business 
transactions involving the provisioning of information, goods 
or services free of charge also qualifies as a business 
transaction, such as a subscription to a free Internet access 
service or a free newsletter.

Section 4. Protections against unsolicited commercial electronic mail

    Section 4(a)(1) provides that it is unlawful for any person 
to initiate the transmission of an unsolicited commercial 
electronic mail message to any person within the United States 
unless that message contains a valid, conspicuously displayed 
electronic mail address to which a recipient may reply 
requesting not to receive any further messages.
    Section 4(a)(2) prohibits the transmission of an 
unsolicited commercial electronic mail message after the 
recipient has objected to the receipt of further unsolicited 
commercial electronic mail messages. A request not to receive 
further unsolicited commercial electronic mail messages is be 
deemed to terminate a pre-existing business relationship for 
purposes of determining whether subsequent messages are 
unsolicited commercial electronic mail messages.
    Section 4(a)(3) prohibits the transmission of unsolicited 
commercial electronic mail messages that contain inaccurate or 
invalid routing information or any routing information that 
fails to accurately reflect the routing of that electronic mail 
message.
    Section 4(a)(4) prohibits the transmission of any 
unsolicited commercial electronic mail message to any person 
within the United States unless the message clearly and 
conspicuously provides identification that the message is an 
unsolicited commercial electronic mail message and notice of 
the opportunity not to receive further unsolicited commercial 
electronic mail messages from the initiator.
    Section 4(b)(1) permits a provider of Internet access 
service to enforce a policy regarding unsolicited commercial 
electronic mail messages, but only if that policy complies with 
the requirements of section (4)(b)(3).
    Section 4(b)(2) prohibits the transmission of an 
unsolicited commercial electronic mail message to any person 
within the United States in violation of a policy governing the 
use of the equipment of a provider of Internet access service 
for transmission of unsolicited commercial electronic mail 
messages.
    Section 4(b)(3) establishes the requirements for an 
Internet access provider policy regarding unsolicited 
commercial electronic mail messages. The requirements are--
           The policy must explicitly state that 
        compliance with the rules is a condition of use of the 
        equipment of a provider of Internet access service to 
        deliver commercial electronic mail messages;
           The policy must be publicly available by the 
        clear and conspicuous posting on a World Wide Web site 
        of the provider of Internet access service or the 
        policy is made publicly available by the provider of 
        Internet access service in accordance with a 
        technological standard adopted by an appropriate 
        Internet standards setting body (such as the Internet 
        Engineering Task Force) and recognized by the Federal 
        Trade Commission by rule as a fair standard; and,
           If the policy of a provider of Internet 
        access service requires compensation specifically for 
        the transmission of unsolicited commercial electronic 
        mail messages into its system, the provider must 
        provide an option to its subscribers not to receive any 
        unsolicited commercial electronic mail messages, except 
        that such option is not required for any subscriber who 
        has agreed to receive unsolicited commercial electronic 
        mail messages in exchange for discounted or free 
        Internet access service. The Committee intends that for 
        purposes of subparagraph (C) an Internet access 
        provider must receive compensation specifically for 
        transmission of unsolicited commercial electronic mail 
        messages, not merely compensation for the transmission 
        of any mail messages, whether commercial or non- 
        commercial or solicited or unsolicited.
    Section 4(b)(4) clarifies that nothing in H.R. 3113 is to 
be construed to prevent or limit, in any way, a provider of 
Internet access service from enforcing, pursuant to any remedy 
available under any other provision of Federal, State, or local 
criminal or civil law, a policy regarding unsolicited 
commercial electronic mail messages.
    Section 4(c)(1) provides that a provider of Internet access 
service is not to be liable, under any Federal, State, or local 
civil or criminal law, for any action it takes in good faith to 
block the transmission or receipt of unsolicited commercial 
electronic mail messages that are sent in violation of this 
section.
    Section 4(c)(2) provides that a provider of Internet access 
service, whose facilities are used only as an intermediary, 
retransmitter, or relay for unsolicited bulk commercial 
electronic mail messages transmitted in violation of subsection 
(a), is not to be liable for any harm resulting from the 
transmission or receipt of such electronic mail unless it 
permits the transmission or retransmission of such electronic 
mail with actual knowledge that the transmission is prohibited.

Section 5. Enforcement

    Under section 5(a)(1) of the bill, the Federal Trade 
Commission (the Commission) is to send a notification of 
alleged violation to any person who violates section 4 if: (1) 
a recipient or a provider of Internet access service notifies 
the Commission (in a for and manner as determined by the 
Commission) that a transmission has been received in violation 
of section 4, or (2) the Commission has other reason to believe 
that such person has violated or is violating section 4.
    Section 5(a)(2) requires a notification of alleged 
violation to: (1) identify the violation for which the 
notification was issued, (2) direct the initiator to refrain 
from further violations of section 4, (3) expressly prohibit 
the initiator (and the agents or assigns of the initiator) from 
further initiating unsolicited commercial electronic mail 
messages in violation of section 4 to the designated recipients 
or providers of Internet access service, effective on the 3rd 
day (excluding Saturdays, Sundays, and legal public holidays) 
after receipt of the notification, and (4) direct the initiator 
(and the agents or assigns of the initiator) to delete 
immediately the names and electronic mail addresses of the 
designated recipients or providers from all mailing lists owned 
or controlled by the initiator (or such agents or assigns) and 
prohibit the initiator (and such agents or assigns) from the 
sale, lease, exchange, license, or other transaction involving 
mailing lists bearing the names and electronic mail addresses 
of the designated recipients or providers.
    Section 5(a)(3) provides that upon request of a recipient 
of an electronic mail message transmitted in violation of 
section 4, the Commission must include in the notification of 
alleged violation the names and electronic mail addresses of 
any child of the recipient.
    Section 5(a)(4) provides that if the Commission believes 
that the initiator (or an agent or assign of the initiator) has 
failed to comply with the terms of a notification issued under 
this subsection, the Commission shall serve upon the initiator 
(or such agents or assigns), by registered or certified mail, a 
complaint stating the reasons for its belief and request that 
any response be filed in writing with the Commission within 15 
days. Further, if the Commission, after an opportunity for a 
hearing on the record, determines that the person upon whom the 
complaint was served violated the terms of the notification, 
the Commission must issue an order directing that person to 
comply with the terms of the notification. For purposes of a 
determination under subparagraph (B), receipt of any 
transmission in violation of a notification of alleged 
violation 30 days (excluding Saturdays, Sundays, and legal 
public holidays) or more after the effective date of the 
notification creates a rebuttable presumption that such 
transmission was sent after such effective date.
    Section 5(a)(5) provides that any district court of the 
United States within the jurisdiction of which any transmission 
is sent or received in violation of a notification given under 
this subsection has jurisdiction, upon application by the 
Attorney General, to issue an order commanding compliance with 
such notification. Failure to observe that order may be 
punishable by the court as contempt.
    Section 5(b)(1) provides that a recipient or a provider of 
Internet access service may, if otherwise permitted by the laws 
or rules of court of a State, bring in an appropriate court of 
that State, or may bring in an appropriate Federal court if 
such laws or rules do not so permit, (1) An action based on a 
violation of section 4 to enjoin such violation, and/or (2) an 
action to recover for actual monetary loss from such a 
violation in an amount equal to the greatest of the amount of 
such actual monetary loss or $500 for each such violation, not 
to exceed a total of $50,000.
    Section 5(b)(2) provides that if the court finds that the 
defendant willfully, knowingly, or repeatedly violated section 
4, the court may, in its discretion, increase the amount of the 
award to an amount equal to not more than three times the 
amount available under section 5(b)(1).
    Section 5(b)(3) provides that in any such action, the court 
may, in its discretion, require an undertaking for the payment 
of the costs of such action, and assess reasonable costs, 
including reasonable attorneys' fees, against any party.
    Section 5(b)(4) provides that at the request of any party 
to an action or any other participant in such an action, the 
court may, in its discretion, issue protective orders and 
conduct legal proceedings in such a way as to protect the 
secrecy and security of the computer, computer network, 
computer data, computer program, and computer software involved 
in order to prevent possible recurrence of the same or a 
similar act by another person and to protect any trade secrets 
of any such party or participant.

Section 6. Effect on other laws

    Section 6(a) clarifies that nothing in this is to be 
construed to impair the enforcement of section 223 or 231 of 
the Communications Act of 1934, chapter 71 (relating to 
obscenity) or 110 (relating to sexual exploitation of children) 
of title 18, United States Code, or any other Federal criminal 
statute.
    Section 6(b) provides that no State or local government may 
impose any civil liability for commercial activities or actions 
in interstate or foreign commerce in connection with the 
sending of an unsolicited commercial electronic mail message 
that is inconsistent with the treatment of such activities or 
actions under the bill. However, this Act does not preempt any 
civil remedy under State trespass or contract law or under any 
provision of Federal, State, or local criminal law or any civil 
remedy that relates to acts of computer fraud or abuse arising 
from the unauthorized transmission of unsolicited commercial 
electronic mail messages.

Section 7. Study of effects of unsolicited commercial electronic mail

    The Federal Trade Commission is directed, within 18 months 
after enactment, to submit a report to Congress that provides a 
detailed analysis of the effectiveness and enforcement of the 
provisions of this Act and the need (if any) for the Congress 
to modify such provisions.

Section 8. Separability

    Section 8 provides a separability clause.

Section 9. Effective date

    The effective date of the bill is 90 days after the date of 
enactment.

         changes in existing law made by the bill, as reported

    This legislation does not amend any existing Federal 
statute.

                                  

```